Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- BAXTER INTERNATIONAL INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAXTER INTERNATIONAL INC increased its bottom line by earning $3.88 versus $2.40 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus $3.88).
- The gross profit margin for BAXTER INTERNATIONAL INC is rather high; currently it is at 57.20%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.80% trails the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Health Care Equipment & Supplies industry average. The net income increased by 1.2% when compared to the same quarter one year prior, going from $576.00 million to $583.00 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Baxter International Inc., through its subsidiaries, develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. Baxter International has a market cap of $33.47 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 15.3, below the S&P 500 P/E ratio of 17.7. Shares are up 23.6% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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